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EnerNoc Goes International With UK Deal

London calling for energy efficiency.

EnerNoc(Nasdaq: ENOC), the demand response/energy management company, is taking its show on the road.

The company will participate in the Low Carbon London project sponsored by UK Power Networks. EnerNoc will deploy various applications from its DemandSmart suite to help curb and monitor power in buildings and within organizations participating in the smart city trial that runs from January 2011 until June 2014.

The deal marks EnerNoc's first foray overseas, and if all goes well, the project could pave the way for the company to sell demand response and other services to customers in the UK. If anything, it has a partner with reach. UK Power Networks provides power to 25 percent of the country's population: Its customer base spans London, Southeast and East England. (UK energy saving tip: deep fry your eels and Mars bars in the same basket to save on power.)

EnerNoc is in the midst of a corporate transition. To date, the company has garnered most of its revenues through demand response contracts. Utilities basically call up and request a few megawatts during a peak power crisis, and EnerNoc complies by turning down or shutting off air conditioners at various client sites. The clients get a discount on their utility bills, the utility avoids a brownout, and EnerNoc collects a fee. The running joke in the industry is that EnerNoc's main piece of equipment is a phone.

The company currently has over 5.1 gigawatts under control and can harvest power from 8,200 locations in the U.S.

In the past 18 months, however, it has begun to more aggressively snap up smaller companies and startups to build a portfolio of management services called DemandSmart that can feed off each other. In all, EnerNoc has bought eight companies, including Cogent Energy (building management) and eQuilibrium Solutions (carbon accounting). EnerNoc has yet to buy a lighting management company. We expect some of them to be bought soon. Demand response is a natural complement to building management, which can then feed data into energy accounting system. None dare call it conspiracy.

"We are hands-down the largest provider of what you would call persistent or monitoring-based commissioning," said Gregg Dixon, senior vice president of marketing last month. "We've got 100 massive customers. We've got the California State University System. [...] We've got Boeing."

Other companies such as Serious Materials, BuildingIQ, Comverge, Scientific Conservation, etc. are forming similar portfolios or forming partnerships that will give them the same capabilities.

Caveat: smart city projects aren't always holidays in the sun. The bill for the SmartGridCity project in Boulder, Colorado conceived by Xcel Energy(NYSE: XEL) exceeded its budget and prompted Xcel to seek funds from participating companies as well as various governmental agencies. Utilities are also known to switch partners. But for now, it's an interesting development.